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After The Close - Volatility is the name of the game on Wall Street these days, with rather pronounced and at times lightning quick swings in the direction of trading seen on nearly a daily basis. The rollercoaster ride investors are being taking on so far in June is mostly due to worries about what the world’s central banks—most notably the U.S. Federal Reserve—plan to do next with regards to their accommodative monetary policies. At one point during today’s session, the S&P 500 Volatility Index (or VIX), which is often referred to as the “fear index” hit its highest mark since late February, an indication of growing bearish sentiment among investors.

Indeed, when all was said and done, it was another productive trading day for the bears. All of the major U.S. equity indexes finished in the red, with the Dow Jones Industrials, the NASDAQ, and the broader S&P 500 Index shedding 127, 37, and 14 points, respectively. Nearly all of the Dow-30 components finished in negative territory, with one notable exception being the shares of computer giant Hewlett-Packard (HPQ - Free Hewlett-Packard Stock Report), which managed to hit a 52-week high early in the session. Overall, declining issues held a sizable lead over advancers on both the New York Stock Exchange and the NASDAQ. There were few places for investors to hide, as all of the top-10 sectors were in negative territory, though the losses were modest for the defensive-oriented groups. Telecommunications and healthcare stocks held up the best during the volatile trading session. However, the utilities were the hardest hit, as the high-yielding sector has fallen out of favor in recent weeks, with a rise in interest rates adding to the downside pressure. The yield on the benchmark 10-year Treasury note inched higher in the latest session.

The lack of major news on either the economic or the corporate fronts has created a bit of a vacuum on Wall Street, with investors focusing on one specific issue throughout much of the session. That is, the aforementioned concerns that the world central banks are going to at least step gingerly on the brakes with regards to monetary policies in the months ahead. Such worries have pressured equities at times during the last fortnight of trading—and that certainly seemed to be the case once again today. While we will get more clarity on this topic one week from today when the Federal Reserve concludes its two-day monetary policy meeting, there is no definitive evidence that the Fed will or will not be winding down its bond buying soon. This has created a tug-of-war between the bulls and the bears during several of the recent trading sessions. Right now, the bears seem to be winning, as it is not a case of if the Fed will act, but how soon. It is inevitable that the central bank will remove a leg of support that has kept interest rates low and helped drive U.S. stocks higher for much of this year.

Meantime, before we hear from the lead bank next week, we will get a few important reports on the U.S. economy, beginning with tomorrow morning’s data on retail sales for the month of May. Then on Friday, we will get reports on producer prices and industrial production. While none of these reports is likely to pack the same wallop as what the Federal Reserve’s next move will be, the scope and tone of those releases could add to the market’s recent volatility.   - William G. Ferguson  

At the time of this article’s writing the author did not have positions in any of the companies mentioned.

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12:15 PM EDT - The stock market opened higher this morning, but is now selling off again. At just past noon in New York, the Dow Jones Industrial Average is off 55 points (-0.4%); the broader S&P 500 Index is down six points (-0.4%); and the NASDAQ is off 18 points (-0.5%). Market breadth shows a weak market as well, as declining stocks are now outnumbering advancers by a decent margin on the NYSE. The market sectors are also largely divided, with some relative strength in the basic materials and healthcare issues and considerable declines in the utility stocks. Notably these issues, known for their stability and high yields, have fallen sharply out of favor lately.

Technically, the market continues to struggle. Yesterday, stocks opened lower, attempted a comeback in the late morning, but ultimately succumbed to selling in the afternoon. This volatility likely demonstrates that traders are divided, and some are using bounces to exit positions. Meanwhile, we are seeing similar behavior today, as the market opened higher, but rather than following through, traders either took profits, or sat on the sidelines. Ultimately, this suggests that some fatigue may be setting in for the bulls. We will simply have to wait and see how things play out. Hopefully, if the S&P Index moves lower from here, it will find some support at the 1,600 level, which corresponds to a large round number, as well as its 50-day moving average.

There have been no major economic releases out today, and the lack of news may be adding to confusion among traders. Tomorrow, we get the weekly initial and continuing claims data, as well as reports on monthly retail sales, export and import prices, and business inventories. So there will be a lot of information to digest. At this point, many are likely looking for modest, but not overly impressive, improvements. While the economy’s general direction is important, many are looking for assurances that the Federal Reserve will maintain its current monetary policy. On that note, investors will be focusing on next week’s FOMC comments and rate decision for guidance.

In corporate news, shares of Ulta Salon (ULTA) are trading higher, after the beauty supplier posted better-than-expected profits. Shares of First Solar (FSLR) are trading lower after that company announced that it is issuing common equity to fund various growth initiatives.  - Adam Rosner

At the time of this article’s writing the author did not have positions in any of the companies mentioned.

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Stocks to Watch from The Survey There is more M&A news out today. Indeed, shares of Cooper Tire & Rubber (CTB) are soaring in the premarket, after the company agreed to be acquired by fellow tire manufacturer Apollo Tyres, which is based in India, for $35 a share in cash. The announcement appears to be pulling up shares of industry peer Goodyear Tire (GT), as well.

On the earnings front, the stock of Ulta Salon (ULTA) is up sharply ahead of the bell, after the retailer of cosmetics, fragrances, haircare, and skincare products impressed investors with its April-period results.

Finally, shares of Rambus (RMBS) are indicating a higher opening this morning, on news that the semiconductor company has settled a patent case with South Korea-based SK Hynix. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - Stocks tumbled across a broad front to start the day yesterday after the Bank of Japan failed to provide further economic stimulus as had been expected. That disappointment caused many traders over here to sense that the Federal Reserve would start to slow its pace of bond purchases when its FOMC meeting convenes next week.

Such fears led to an early drop of just over 150 points in the Dow Jones Industrial Average, following a mixed session on Monday. But when that early selling failed to mushroom into a larger setback, the selling eased. In fact, by midday, the Dow had retraced its earlier losses, and for a brief while had even managed to nudge modestly into the plus column by a dozen points, or so. The other indexes also rallied into mid-session, but could not offset their entire losses.

Then, when the buying dissipated just as quickly as it had begun, the averages turned south again, and after a succession of mini-rallies and subsequent modest selloffs, the equity market finally settled in with notable losses. All told, the Dow lost 117 points; the NASDAQ shed 37 points; and the smaller-cap indexes, such as the Standard and Poor's 400 and the Russell 2000, fell a bit more sharply on a proportionate basis. All in all, it was another poor session for the bulls, and marked the second successive Tuesday that the stock market has fallen following a string of some 20 winning sessions on Tuesday.

Such volatility is certainly anathema to the confidence of traders. And yesterday was not the first such instance in which large one-day swings were experienced, both up and down, as typified by last Friday's 208-point advance in the Dow. Worse, there have been a series of days in which marked intraday swings have taken place, and that can be even more unnerving. The big issue remains the Federal Reserve and concerns that the long run of dramatic stimulus efforts may be close to ending. Some have felt that the Fed could well opt to slow down its rate of bond buying, which now totals $85 billion a month, and is now the cornerstone of such stimulus endeavors as soon as this month. This past Friday, a less-than scintillating report on the nation's employment situation had appeared to calm those immediate concerns somewhat. Then, after the Bank of Japan chose to not increase its stimulus efforts, the fears over here, whether logical or not, resurfaced, and the market sold off.

Now, however, a new day is upon us, and the markets are rebounding around the world, regaining a portion of the losses they suffered yesterday. The dollar, which yesterday had chalked up its biggest one-day loss against the yen since May of 2010, has recovered slightly so far this morning, as well.

Meanwhile, there may also be a sense, among cooler heads in the market, that the flow of data from this country may not be sufficiently supportive for the Fed to wind down its efforts just yet. That feeling, which is being expressed among some investors this morning, is helping to give the futures on our shores a nice lift, with the NASDAQ futures now climbing by 15 points, while the S&P 500 futures are better by some seven points. That would seem to presage a nicely higher start when traders get down to business in less than an hour from now.

Finally, it should be noted, that there will be few releases of note once again today, but that the business beat will pick up over the final two days of the week, with the data on retail sales, jobless claims, consumer sentiment, and industrial production being issued. – Harvey S. Katz     

At the time of this article's writing, the author did not have positions in any of the companies mentioned.